1.1 	A bill for an act
1.2 	relating to financial institutions; making changes in regulation of consumer small 
1.3 	loans; providing consumer protections; amending Minnesota Statutes 2006, 
1.4 	section 47.60, subdivisions 1, 4; Minnesota Statutes 2007 Supplement, section 
1.5 	47.60, subdivision 2.
1.6 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.7 	Section 1. Minnesota Statutes 2006, section 47.60, subdivision 1, is amended to read:
1.8 		Subdivision 1.Definitions. For purposes of this section, the terms defined have 
1.9 	the meanings given them:
1.10 	(a) "Consumer small loan" is a loan transaction in which cash is advanced to a 
1.11 	borrower for the borrower's own personal, family, or household purpose. A consumer 
1.12 	small loan is a short-term, unsecured loan to be repaid in a single installment. The cash 
1.13 	advance of a consumer small loan is equal to or less than $350 $500. A consumer small 
1.14 	loan includes an indebtedness evidenced by but not limited to a promissory note or 
1.15 	agreement to defer the presentation of a personal check for a fee.
1.16 	(b) "Consumer small loan lender" is a financial institution as defined in section 47.59
1.17 	or a person registered with the commissioner and engaged in the business of making 
1.18 	consumer small loans. 

1.19 	Sec. 2. Minnesota Statutes 2007 Supplement, section 47.60, subdivision 2, is amended 
1.20 	to read:
1.21 		Subd. 2.Authorization, terms, conditions, and prohibitions. (a) In lieu of the 
1.22 	interest, finance charges, or fees in any other law, a consumer small loan lender may 
1.23 	charge the following:
1.24 	(1) on any amount up to and including $50, a charge of $5.50 may be added;
2.1 	(2) on amounts in excess of $50, but not more than $100, a charge may be added 
2.2 	equal to ten percent of the loan proceeds plus a $5 administrative fee;
2.3 	(3) on amounts in excess of $100, but not more than $250, a charge may be 
2.4 	added equal to seven percent of the loan proceeds with a minimum of $10 plus a $5 
2.5 	administrative fee;
2.6 	(4) for amounts in excess of $250 and not greater than the maximumthe amount 
2.7 	permitted in subdivision 1, paragraph (a), a charge may be added equal to six15 percent 
2.8 	of the loan proceeds with a minimum of $17.50 plus a $5 administrative fee.
2.9 	(b) The term of a loan made under this section shall be for no more than 3031 
2.10 	calendar days unless the term of the loan is extended by agreement of both the borrower 
2.11 	and the licensee pursuant to the extended payment plan authorized under this subdivision 
2.12 	and no additional fee or interest is charged.
2.13 	(c) The loan contract must include a provision that offers the borrower an optional 
2.14 	extended payment plan that may be invoked by the borrower on the last business day 
2.15 	before the maturity date of the loan.
2.16 	(1) To invoke the extended payment plan, the borrower must return to the office 
2.17 	where the loan was made and sign an amendment to the original loan agreement reflecting 
2.18 	the extended terms of the loan and the new payment schedule.
2.19 	(2) A licensee must offer to each borrower at least one extended payment plan 
2.20 	per calendar year.
2.21 	(3) The extended payment plan must allow the borrower to repay the balance in four 
2.22 	equal payments with the first payment being due on the date the borrower enters into 
2.23 	the extended payment plan and the remaining payments being due on the borrower's 
2.24 	next three scheduled periodic pay dates.
2.25 	(4) No additional interest, fees, or charges may be applied to the loan upon the 
2.26 	borrower entering the extended payment plan as long as the borrower is in compliance 
2.27 	with the terms of the extended payment plan.
2.28 	(5) The contract provision regarding the extended payment plan must stipulate that 
2.29 	the plan may be revoked and the entire balance become immediately due and payable if 
2.30 	the borrower fails to abide by the terms of the extended payment plan.
2.31 	(6) The person originating the loan for the licensee must identify verbally to the 
2.32 	borrower the contract provision regarding the extended payment plan, and the borrower 
2.33 	must verify that the provision has been identified by initialing the contract adjacent to 
2.34 	the provision.
3.1 	(c)(d) After maturity, the contract rate must not exceed 2.75 percent per month of 
3.2 	the remaining loan proceeds after the maturity date calculated at a rate of 1/30 of the 
3.3 	monthly rate in the contract for each calendar day the balance is outstanding. 
3.4 	(d)(e) No insurance charges or other charges must be permitted to be charged, 
3.5 	collected, or imposed on a consumer small loan except as authorized in this section.
3.6 	(e)(f) On a loan transaction in which cash is advanced in exchange for a personal 
3.7 	check, a return check charge may be charged as authorized by section 604.113, subdivision 
3.8 	2, paragraph (a). The civil penalty provisions of section 604.113, subdivision 2, paragraph 
3.9 	(b), may not be demanded or assessed against the borrower. 
3.10 	(f)(g) A loan made under this section must not be repaid by the proceeds of another 
3.11 	loan made under this section by the same lender or related interest. The proceeds from a 
3.12 	loan made under this section must not be applied to another loan from the same lender 
3.13 	or related interest. No loan to a single borrower made pursuant to this section shall be 
3.14 	split or divided and no single borrower shall have outstanding more than one loan with 
3.15 	the result of collecting a higher charge than permitted by this section or in an aggregate 
3.16 	amount of principal exceed at any one time the maximum of $350 the amount permitted 
3.17 	in subdivision 1, paragraph (a).
3.18 	(h) A loan may be rescinded at no cost if the borrower returns the proceeds of a 
3.19 	consumer small loan transaction by the close of the business day that immediately follows 
3.20 	the day upon which the loan was made.
3.21 	(i) A lender must not threaten to use criminal prosecution to collect on a consumer 
3.22 	small loan. A consumer must not be subject to any criminal penalty in the event the 
3.23 	instrument is dishonored, unless the consumer's account on which the instrument was 
3.24 	written was closed before the agreed upon date of negotiation, subject to the provisions 
3.25 	of section 609.52.

3.26 	Sec. 3. Minnesota Statutes 2006, section 47.60, subdivision 4, is amended to read:
3.27 		Subd. 4.Books of account; annual report; schedule of charges; disclosures. (a) 
3.28 	A lender filing under subdivision 3 shall keep and use in the business books, accounts, 
3.29 	and records as will enable the commissioner to determine whether the filer is complying 
3.30 	with this section.
3.31 	(b) A lender filing under subdivision 3 shall annually on or before March 15 file a 
3.32 	report to the commissioner giving the information the commissioner reasonably requires 
3.33 	concerning the business and operations during the preceding calendar year.
3.34 	(c) A lender filing under subdivision 3 shall display prominently in each place of 
3.35 	business a full and accurate schedule, to be approved by the commissioner, of the charges 
4.1 	to be made and the method of computing those charges. A lender shall furnish a copy of 
4.2 	the contract of loan to a person obligated on it or who may become obligated on it at any 
4.3 	time upon the request of that person. This is in addition to any disclosures required by the 
4.4 	federal Truth in Lending Act, United States Code, title 15.
4.5 	(d) A lender filing under subdivision 3 shall, upon repayment of the loan in 
4.6 	full, mark indelibly every obligation signed by the borrower with the word "Paid" or 
4.7 	"Canceled" within 20 days after repayment.
4.8 	(e) A lender filing under subdivision 3 shall display prominently, in each licensed 
4.9 	place of business, a full and accurate statement of the charges to be made for loans made 
4.10 	under this section. The statement of charges must be displayed in a notice, on plastic or 
4.11 	other durable material measuring at least 12 inches by 18 inches, headed "CONSUMER 
4.12 	NOTICE REQUIRED BY THE STATE OF MINNESOTA." The notice shall include, 
4.13 	immediately above the statement of charges, the following sentence, or a substantially 
4.14 	similar sentence approved by the commissioner: "These loan charges are higher than 
4.15 	otherwise permitted under Minnesota law. Minnesota law permits these higher charges 
4.16 	only because short-term small loans might otherwise not be available to consumers. If 
4.17 	you have another source of a loan, you may be able to benefit from a lower interest rate 
4.18 	and other loan charges." The notice must not contain any other statement or information, 
4.19 	unless the commissioner has determined that the additional statement or information is 
4.20 	necessary to prevent confusion or inaccuracy. The notice must be designed with a type 
4.21 	size that is large enough to be readily noticeable and legible. The form of the notice must 
4.22 	be approved by the commissioner prior to its use.
4.23 	(f) A lender filing under subdivision 3 must display prominently, in each licensed 
4.24 	place of business, a notification of the extended repayment plan, and other locally 
4.25 	available debt repayment services such as consumer credit counseling services.